UK retail sales rise in September

UK retail sales, excluding fuel purchases, rose 0.3% m/m in September. While the outturn was marginally below consensus expectations, the print nonetheless suggests that higher real wages and lower interest rates are supporting spending. The positive momentum is perhaps more surprising given the UK experienced a very wet month in September and sentiment surveys had reported households being concerned about “difficult decisions” in the upcoming budget. On an annual basis sales rose 3.9% in September, up sharply from the 2.3% y/y growth recorded in August.

The US deficit in the 2023/2024 fiscal year hit its highest level – apart from during the Covid period – to reach USD 1.83tn from USD 1.7tn in the previous fiscal year. The rise was primarily driven by higher debt interest payments, together with increased spending on defense and social security. The US deficit has now exceeded 6% of GDP for two consecutive years.

While there is limited data releases scheduled for the week ahead, there are several high-profile speakers, including Christine Lagarde and Andrew Bailey, taking part at the IMF/World Bank Group meeting this week.

Today’s Economic Data and Events

• 18:00 US Conference Board leading index (Sept): forecast -0.3% m/m

Fixed Income

• Treasury yields moved marginally lower on Friday, with the 2yr yield falling 2bps to reach 3.9483% and the 10yr yield declining by les that 1bps to 4.0828%. Moves over the course of the week left the 2yr yield largely flat week-on-week, while the 10yr yield was 2bps lower.
• Major European bond market yields generally ended Friday lower. Yields on both 10yr Gilts and Bunds fell 3bps on the day to 4.0551% and 2.182%, respectively.

FX

• The dollar spot index remains stronger against a basket of peers for the third consecutive week, despite falling 0.32% on Friday. Both EURUSD and GBPUSD gained 0.3% on the day to reach 1.0867 and 1.3052, respectively. USDJPY fell 0.45% to 149.53.
• Commodity currency moves were mixed on Friday. USDCAD rose marginally higher, increasing 0.03% to 1.3799, while AUDUSD rose 0.15% to 0.6706 and NZDUSD gained 0.18% to close at 0.6071.

Equities

• US equity markets closed higher on Friday, with technology stocks receiving a boost after Netflix posted a strong profit update. US stocks have now seen their longest weekly rally of 2024 by gaining for six consecutive weeks. The Dow Jones managed a rise of 0.1% on Friday, with a weekly gain of 0.96%. The S&P 500 rose 0.4% on the day, and 0.85% over the course of the week. The NASDAQ gained 0.63% on Friday and ended 0.8% higher week-on-week.
• Most European markets ended Friday higher. The EuroStoxx 50 index rose 0.8%, while both the CAC 40 and the DAX gained 0.4%. The FTSE 100 in contrast fell 0.32%.
• The DFM rose 0.24%, while the ADX gained a marginal 0.01% on Friday.

Commodities

• Oil prices declined once more on Friday, with lackluster Q3 GDP data out of China heightening concerns about the outlook for demand growth going forward. Brent futures fell 1.87% to USD 73.06/b, while WTI dropped 2% to USD 69.22/b.